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PPI & Philly reports offset by the weaker Empire data

Market Analysis

USDJPY, M30

 The dollar slipped slightly following the mix of data, which saw PPI hotter than expected, jobless claims in line with forecasts, the Philly Fed index better than expected, and the Empire State index weaker. EURUSD edged up to 1.2487 from under 1.2465, as USDJPY dipped to 106.45 from 106.65, breaking the intra-day Support area and the 20-period MA, at 106.50. Equity futures continue to indicate a higher Wall Street open, while yields were marginally higher.

U.S. PPI rose 0.4% in January on both the headline and the core, a little hotter than expected, after an unchanged headline reading in December (revised from -0.1%) and a -0.1% ex-food and energy print. On a 12-month basis, PPI accelerated to 2.7% y/y versus 2.6% y/y, while the core slowed to 2.2% y/y versus 2.3% y/y. U.S. initial jobless claims rose 7k to 230k in the week ended February 10 after dropping 7k to a revised 223k in the prior week. Meanwhile, U.S. February Empire State manufacturing index fell 4.6 points to 13.1 after sliding 1.9 points to 17.7 in January, while Philly Fed manufacturing index rose 3.6 points to 25.8 in February, better than expected, after falling 5.7 points to 22.2 in January. The 35.5 reading from last May was the high for the year, and the best since the 36.4 from March 2011. Strength was broad-based. The employment component climbed to 25.2 from 16.8, though the workweek slid to 13.7 from 16.7. New orders more than doubled to 24.5 from 10.1. Prices paid rose to 45.0 from 32.9, but prices received dipped to 23.9 from 25.1. The 6-month general business index edged down to 41.2 from 42.2, with employment at 40.4 from 34.9, new orders at 49.1 from 46.2, prices paid at 65.2 from 54.2, and capital expenditures at 40.4 from 36.2. The rise in the prices paid component could add to the markets’ fear of rising inflation.

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Andria Pichidi

Market Analyst

HotForex

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